An interesting New York Times article about declining homeownership rates features a strange comment from the CEO of the homebuilding firm Toll Brothers about how people should own homes because they like grass:
“There’s no question that people are reticent to own,” said Douglas C. Yearley Jr., chief executive of Toll Brothers, the builder of high-end homes. “They’re renting and they’re happy renting because they’re scared.”
Yet those fears will fade, he predicted.
“Most people still want the big house with the big lot in the desirable school district in the suburbs. No one ever renovated the kitchen or redid a room for the kids in a rental,” Mr. Yearley said. “I think — I hope — we’ll be O.K.”
This seems to me to conflate a lot of different issues. One is whether or not people will want to live in suburban-style developments. The other is whether or not people will want to make leveraged investments that they also live in. It’s true that currently the rental market for single-family homes is pretty sparse, especially in the suburbs. But plenty of people own urban condos (I do), and it doesn’t strike me as unimaginable that in the future there’ll be companies that own and lease large quantities of single-family suburban homes. I imagine a company like that would actually be quite interested in trying to upsell its existing client base by offering to renovate a kitchen in exchange for higher monthly rent. And since the home management firm would have large scale and specialized expertise, it would probably be able to get better prices and performance from contractors than an individual homeowner.